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Organizing
The nature of organizing

Organizations are systems created to achieve a
set of goals through people to people and
people to work relationships.
 Each system has its own external and internal
environments that define the nature of those
relationships according to its specific needs.
 A hospital for example has organizational need
that are different from those of a university,
which are different from those of a museum or of
the federal government.
Organizing
 Organizing
is what managers do when they
design, structure, and arrange the components
of an organization’s internal environment to
facilitate the attainment of organizational goals.
For example to meet its goal of delivering high
quality health care, a hospital may organize
both in and outpatient facilities, locate its
emergency room on the first floor of the
building to prevent delays in treating critical
cases, prepare meals provide room cleaning
services and so forth.
Organizing

Managers organize by defining and coordinating work
at a number of different levels: tasks are grouped to
formed jobs, jobs are combined into departments and
departments are organized into divisions.
 Organizational activities are supported by a variety of
systems.
 For example that link a large hospital with its satellites
provide computerized information exchange on such
matters as budgets and medical information.
 Managers must organize the systems needed to fulfill
all of the organization's coordination needs.
Organizing



Within any organization, there are both formal and informal
components.
The formal organization exists as a result of the official
structures and systems managers design through the
organizing activity. The formal organization usually contains a
structured decision-making, communication and command
system that helps people pool their time, energy, and talents to
reach common objectives.
The informal organization, in contrast exists when two or
more people interact for a purpose or in a manner beyond that
specified by managers. Informal organizations evolve in a
natural, unplanned manner, but they may also form
intentionally. A group of nurses at a nursing station between
shifts may contain some members who want to socialize, others
who want a snack, and some who want a place to wait for a
ride home. Because members of the informal organization
exchange information, satisfy individual needs and influence
one another, the informal organization may have direct and
significant implications for mangers of the formal organization.
Organizing

In the formal organization managers prescribe
expected behaviors through job descriptions,
rules and policies, operating procedures.
 In contrast informal behaviors arise from the
needs, norms, values and standards of
organization members.
 Managers need to recognize that both formal
and informal organizations exists and both
influence the overall efficiency and effectiveness
of their organization.
Organizing jobs

An organization achieves its goals through the work
done by its members.
 To facilitate this managers organize various tasks into
jobs. Before the industrial revolution, the dominant
approach to job design was the craft approach. In
which a single skilled worker designed and built
products one at a time from beginning to end. For
example a craftsperson raised and sheared sheep,
washed and carded the wool, dyed it with berries or
blossoms that he or she had gathered, dried and spun
it into yarn and wove it into clothing.
 Following the industrial revolution however the craft
approach nearly disappeared.
Organizing jobs (Cont.)

1.
2.
3.
4.
The craft approach has been replaced
almost entirely by four other approaches
to job design:
Classical,
Behavioral,
Contingency and
Work group.
Classical approach

In the classical approach, labor is divided into jobs
made up of a few simple, repetitive standardized
tasks.
 Adam smith first illuminated the economic advantages
said to accompany the specialization, standardization
and simplification of work in his classic book Wealth of
Nations.
 Succeeding generations of managers built on the idea
of the division of labor and Frederick W. Taylor and
other advocates of scientific management brought
Smith’s concepts into twentieth century organizations.
 Commonly used techniques that harkens back to
Taylor include Vertical specialization, which removes
planning and controlling activities from production
employees horizontal specialization which creates
many low skill level repetitive jobs.
Classical approach
 The
classical approach to job design was seen
as a way to achieve greater productivity,
efficiency, control and standardization of work.
 Critics of this approach suggested that
employees occupying simplified, low skilled
level, repetitive jobs eventually perceive them
as monotonous and thus become bored and
dissatisfied, boredom and job dissatisfaction,
and eventually translate into absenteeism,
turnover and various other forms of output
restriction.
The Behavioral approach

The classical approach to job design tried to make
organizations efficient and effective by making work
simple, but in 1940s and early 1950s, behavioral
management advocates suggested that perhaps the
same objective could be attained by making work
interesting.
 The behavioral approach rejects the idea of treating
people like automated machines, continuously
performing simple and repetitive activities.
 Behavioral theorists noted that although machines
have no emotions, people do. When people’s do
feelings are negative, their needs are not met, and
their motives are frustrated workers and their
organization suffer.
The Behavioral approach (Cont.)

1.
2.
Job Enlargement and Job Enrichment: To interest and
motivate workers, behavioral management advocates first
introduced two alternative job design strategies.
Job enlargement: adds breadth to a job by increasing the
number and variety of activities performed by an employee.
For an insurance clerk’s job, which consists primarily of
repeatedly completing one type of insurance application, can
be horizontally enlarged by adding other forms to be typed,
filling duties, and communication with clients and agents to
maintain insurance histories.
Job enrichment: adds depth to a job by adding managerial
activities planning, organizing, directing and controlling to an
employee’s responsibilities. The insurance clerk’s job could
be vertically loaded by allowing the worker to make decisions
about accepting new policy applications rejecting claims etc.
The Behavioral approach (Cont.)

The Job Characteristics Model: an expansion on the
ideas of job enlargement and job enrichment is found
in the JOB CHARACTERISTICS MODEL (JCM)
developed by J. Richard Hackman of Harvard
University and Greg Oldham of the University of
Illinois. This model specifies the critical job
components that lead to positive results for both an
organization and its workers.
 According to the JCM if a job has high levels of the
five core components, a worker will perceive the job
as meaningful, will develop a sense of responsibility
for the outcome of the work, and will understand the
results of his or her efforts.
The Behavioral approach (Cont.)
JOB CHARACTERISTICS MODEL (JCM)

1.
2.
3.
4.
5.
6.
7.
These three psychological states are expected to
lead to job satisfaction: motivation, high quality work
performance, and a reduction in absenteeismtardiness and turnover behaviors. The five core
components 1-5 and two supplemental socially
oriented components are:
Skill variety
Autonomy
Task significance
Task identity
Job feedback
Agent feedback
Dealing with others
The contingency approach

A number of management scholars have argued
that neither the classical nor the behavioral
approach to job design is universally most
appropriate.
 According to the contingency approach to job
design, managers should organize work and
design jobs to fit the characteristics of the worker
who will perform that job, the organization
technology, and other design characteristics of
the organization.
The contingency approach (Cont.)

This approach advocates that people have
different needs and personality characteristics
and therefore respond differently to job designs.
 Some employees for example prefer routine
jobs, while others respond more favorably to
complex jobs. Individuals with strong esteem,
growth and achievement needs should be most
compatible with complex jobs.
The self managing work group
approach

Some types of work, however are not well suited
to being performed by a single individual. In the
self managing work group approach, managers
assign work to an entire group rather than to
individuals. The group is given the authority to
create the processes needed to accomplish their
assigned work and to handle internal problems.
 Each construction team operating
autonomously, performs a wide variety of task,
and team members change job assignments
frequently so that they eventually learn the entire
range of assembly activities.
The self managing work group
approach (Cont.)

Work in self managing group is designed to offer
variety, autonomy, significance, task identity, feedback
and opportunities for human interaction.
 Group members participate in their own management
and as a result are more likely to accept, support, and
actively pursue the procedures and goals set by the
group.
 This approach however also moves organizational
control from the hands of traditional managers to
those of workers.
 Managers and workers must be able to accept this
transformation, or the approach will fail.
departmentalization

The process of grouping jobs into organizational units
and those units larger units is referred to as
departmentalization.
 Organizations use departmentalization to answer the
question “ what activities do we want to coordinate at
one place in the organization hierarchy?”
 Managers have tried various ways to group
organization activities.
 One method for example around the type of customer
or customer need, another method groups activities
around the equipment or product.
Departmentalization by Function

Manager create functional departments by grouping
activities according to the nature of the work
performed.
 A marketing department for example controls only
marketing activities. Each functional unit may be
broken down further for coordination and control
purpose.
 Functional departments offers a number of
advantages. Because people who perform similar
functions work together, they can specialize and
benefits from one another’s expertise. Decision
making and coordination are easier because
managers need to be familiar with only a relatively
narrow set of activities.
Departmentalization by Function
(Cont.)
 Functional
departments at high levels of the
hierarchy use an organization's resources more
efficiently because a department activity does
not have to be repeated across several
organizational divisions. On the negative side
strong functional grouping may prevent people
from seeing the totality of an organization.
Communication and coordination across
department can be problematic and conflicts
often emerge when each functional department
attempt to protect its own turf.
Departmentalization by Territory
 Territorial
departmentalization is often used
when organization have widely dispersed
operations of offices.
 The territorial approach has many logistical and
practical advantages. It moves operations
closer to raw materials to distribution systems,
and to customers.
 Sometimes geographic variations in laws,
regulations, and customs change the nature of
doing business enough so that territorial
arrangements are necessary.
Departmentalization by Territory
(Cont.)
 At
negative side, territorial offices may
undermine each other by competing for
organizational resources, and geographical
dispersion can make it difficult for an
organization to enforce uniform standards.
 The physical separation of organizational
divisions can also create communication and
coordination problems.
Departmentalization by Project
 Project
departments are generally created to
address specific, often unique, organizational
goals and cease to exist once that goal has
been achieved- that is when the project has
been completed.
 Managers can create a project department in a
number of ways. One approach is to hire or
transfer a group of employees to form a new
department solely to work on the project at
hand.
Departmentalization by Project
(Cont.)

A second method mangers use to create a project
department involves the matrix approach an
organizational arrangement in which two overlapping
structures are used. This type of project department is
staffed with workers from various parts of the
organization who may be released from their regular
responsibilities, either on a part time or full time basis.
When they are required to perform their regular duties
in addition to those of the project department, these
individuals are accountable to their home department
as well as to the project department.
Departmentalization by Project
(Cont.)

A primary advantage of creating a new department for
a project is that it produces a group of people who are
concentrating on a single organizational role and
chosen for their ability to do so.
 The drawback is that once the project is finished they
have no remaining organizational role to fulfill.
 The matrix approach makes it easy to choose qualified
members from almost anywhere in an organization
who are familiar with a wide range of organizational
issues, but this can be disruptive because members
must divide their time, attention and energy between
their regular and special assignments.
The hybrid approach to
departmentalization
 The
hybrid approach calls for the simultaneous
use of two or more departmentalization
strategies.
 For example The hybrid approach to an
organization, mangers has organized top level
according to organizational function and special
project. The operation department is subdivided
by product and the supervisor of the marketing
department territories is also heading a special
project department on market research.
Span of control
 Span
of control also referred to as span of
management and span of supervision,
refers to the number of subordinates and
activities that a manager oversees.
 Managers must consider span of control
when departmentalizing so they do not
create a span that is too large to handle.
Span of control (Cont.)

During the classical management period, many people
tried to determine an ideal span of control.
 Most argued in favor of greatly limiting a manager’s
span of control, some proposed that limitation on a
manager’s attention, energy, and knowledge should
restrict the span of control to five or six employees.
Others argued that the nature of work and the
limitation of the human brain should produce an
increasingly narrower span of control as one moves
up an organization’s hierarchy. At the top a manager
would be responsible for no more than six people but
at lower levels a much wider span would be
acceptable.
Span of control (Cont.)

In practice there is no universally ideal span of control.
If a span is too limited, a manager’s talent may be
underutilized. If the span is too large, a manager may
have too much work to perform any of it effectively. If
the span is too small ; it might result in too much
supervision. In such cases mangers often baby sit
subordinates not allowing them enough freedom to be
effective.
 The size of a manager’s span has other organizational
implications as well. An organization with a wide span
of control- that is many subordinates reporting to one
manager- is relatively flat. Narrower spans make a
taller organizational structure with multiple levels of
management.
Determining the appropriate span

1.
Because of the importance of span of control,
managers should consider at least three factors
when determining the span appropriate for their
organization: the individual supervisor, the employee
group, and the situation.
The individual supervisor: a number of
manager/supervisor characteristics should influence
the span of control decision. Some managers, for
example, believe that their subordinates are capable
of self direction and self control; other do not. Those
in the former group may be able to handle a broad
span because their burden is lessened by allowing
subordinates to exercise some self management.
Managers who believe in delegating authority and
can do so effectively may be able to handle a larger
span than managers who need to be intimately
involved in each subordinate’s work.
Span of control (Cont.)
2.
The employee group: employee competence is also
a factor in the span of a manager’s control. A highly
professional group, a seasoned group, or a group of
individuals with high levels of independence all
permit managers a wider span of control than groups
with less experience, competence or independence.
Thus for an accounting firm at which all accountant
are CAs with at least five years of field experience,
span of control can be much larger than that at a
firm where most accountants are fresh out of college
and lack work experience.
Span of control (Cont.)
3.
The situation: the nature of the situation also
affects span of control. The more uncertain a task,
for example the smaller the span must be. The same
holds true for highly interdependent tasks. In both
cases a narrow span of control provides managers
and subordinates with the frequent and unrestricted
communication they need for coordination and
control. Managers of research labs, for example can
supervise only a smaller number of assistants
because of the daily need to evaluate and direct
experiments. Contrast this with a regional sales
supervisor whose primary contacts with twenty
sales representative are phone call to check on
weekly sales results and six motivational meeting a
year.
Coordinating organizational activities
and units
 When
work is divided and various jobs and
departments are created, some one must
integrate and coordinate these organizational
subsystems.
 Coordinating activity is the essence of
organizing. The purpose of organizing is to
achieve an integration among the diverse
organizational parts and systems. Coordinating
links tow or more organizational units so that
they work harmoniously.
Coordinating organizational activities
and units (Cont.)

1.
Organizations have two basic kinds of
coordination needs: vertical and horizontal.
Vertical coordination: to meet organizational
goals, managers must coordinate the
hierarchal levels. The institution level, for
example must be coordinated with the
technical core. Vertical coordination links
people and units that are separated by
hierarchal level.
Vertical coordination (Cont.)

Managers can achieve vertical coordination n a
number of ways, for example, in small uncomplicated
organizations or within individual organizational units,
superior and subordinates can meet face-to-face. The
direct supervision enables people to communicate
provides direction ;and assistance, and integrates
activities across organizational levels. Another way
managers coordinate work across levels in the
hierarchy is through standardization of activities. Large
span of control, high communication needs, a desire
for uniformity in operations, and physical dispersion all
create pressure to standardize activities. At this point,
the exception principle takes over, and managers
concentrate their efforts on matter that deviate from
routine, such as a customer who threatens the
physical safety of a collection agency employee.
Vertical coordination (Cont.)

A third way to achieve vertical coordination is through
goal statements. When the nature of works makes it
difficult to designate the specific behaviors that are
needed , managers can create a hierarchy of goals.
For example the general Manager of a company,
might specify a goal of increasing sales by 15%in the
next year. The vice president of sales and marketing
then assigns a sales goal to each of the division’s
regional managers. They in turn, assign a sales goal
to their subordinates. This set of interrelated goals
guides the actions of lower level employees, and their
accomplishments become the means through which
the next higher level achieves it goals, and so on to
the top of the hierarchy.
Horizontal coordination

Horizontal coordination occurs within a single
hierarchical level and thus make it possible for
managers to coordinate organization members and
units that do not have a hierarchical relationship.
through horizontal coordination, for example, the
efforts of manufacturing and sales departments are
integrated, and resources are shared. By allowing
managers at the same hierarchical level to work
together, horizontal coordination also relieves
bottlenecks in the hierarchy. For example a director of
purchasing can ask the director of finance, for
permission to deviate from his allotted budget, he
does not to work through higher level managers.
Horizontal coordination (Cont.)

Horizontal coordination can be achieved in several
ways. In many stances, managers can use the same
direct supervision, standardization and goal statement
techniques that bring about vertical coordination.
Additional techniques are also available. Perhaps the
simplest way to achieve horizontal coordination is
through direct contact- that is having two managers
with a common problems communicate directly with
one another.
 When the volume of contact between two
organizational units becomes extremely heavy,
management may assign an employee to act as a
liaison to facilitate communication between the units.
Horizontal coordination (Cont.)

An organization designing a new jet airplane for
example might create a liaison to help coordinate the
efforts of those designing the jets engine with the team
responsible for designing the airframe. Under other
circumstances, an integrator might be appointed.
 The role of an integrator is more complex than that of
a liaison. Liaisons primarily encourage and facilitate
an exchange of information so that coordination can
be achieved between interdependent units. Integrators
on the other hand, are expected to provide leadership
and directly influence the direction taken through their
expertise.
Horizontal coordination (Cont.)
 When
conditions are highly uncertain, an
integrator alone may not be able to coordinate
highly heterogeneous interdependent
organizational units. To deal with this type of
situation, a linking manager must be given the
formal authority to command action. Shifting
from a reliance on the influence that stems from
someone’s expertise to actual, formal authority
is a shift from an integrator to a managerial
linking role.
Horizontal coordination (Cont.)

Direct contact and liaison/integrator roles work well in
coordinating a limited number of organizational units,
but when problems arise involving a number of
organizational units, managers may have to form a
task force. A task force is a temporary group,
generally comprising representatives from the several
units experiencing the difficulty, that comes into
existence to tackle a particular problem and then
dissolves when the problem is resolved. If the problem
needs continual attention, not a one time solution, the
task force becomes permanent and is referred to as a
task force.
Horizontal coordination (Cont.)
 Although
it violates Fayol’s principle of
unity of command, there are times when it
is necessary to give two or more
independent units command authority over
an activity to bring about appropriate
integration.
Authority, delegation and
decentralization

Inexperienced managers often assume their
organization's work will be successfully accomplished
because formally defined jobs and departments
specify how the work should be done. Things work this
way for some people, in some jobs at some times, but
usually this is not the case. In most situations formal
job definitions and coordinating strategies are not
enough to get the work done. Organization must
somehow galvanize their workers inaction, to do so,
they must be influence.
 Influence is a person’s ability to produce results and to
bring about a change in his or her environment.
People derive influence from interpersonal power
and authority.
Interpersonal power
 The
people inside organizations influence one
another and shape organizational events.
Managers for example, can tell subordinates
what to do and in many cases how to do it.
 Non managers can share ideas for cost cutting
measures with supervisors or encourage coworkers to form a union.
 Interpersonal power enables individual
organization members to exert influence over
others and over their organization.
Interpersonal power (Cont.)

1.
2.
3.
There are several types and sources of interpersonal
power, three of which are:
Reward power: the power a person has because
people believe that he or she can bestow rewards or
outcomes, such as money or money or recognition
that other desire.
Coercive power: the power a person has because
people believe that he or she can punish them by
inflicting pain or by withholding or taking away
something they value.
Legitimate power: the power a person has because
others believe that he or she has a right to influence
them and that they ought to obey.
Authority
 Many
equate authority with legitimate power.
Max Weber saw authority as the legitimate right
of a person to exercise influence.
 According to Weber, this perception that
someone has the legitimate right to exercise
influence can stem from such sources as legal
systems, situational demands, relationships
between people, tradition, and charismatic
personalities.
Authority (Cont.)
 The
types of authority in organizations and
their sources are:
 Classical view of authority: one view of
authority arises from the classical approach to
management. According to classical authority
theory, authority is the institutional right of
organizations to act to decide, and to exercise
influence. What this means for organizations,
as authority flows from the institutional level
down to the technical core, all managers
eventually possess some formal authority to
act to decide, and to exercise influence.
Authority (Cont.)

Acceptance view of authority: a second perceptive
on authority is anchored in the nature of interpersonal
relationships rather than in a formal hierarchy of
authority. In the acceptance view of authority
proposed by Chester Barnard and other behavioral
management advocates, authority flows upward from
subordinates to superiors based on the nature of the
relationship between people and their perception of
this relationship. According to acceptance veiw, the
acceptance view, the relationships between
employees and their superiors become authoritative
when the subordinates view those relationship as
legitimate.
Authority (Cont.)

Situational view of authority: a third perspective is the
situational view of authority proposed by Mary Parker
Follett, she argued that rather than one person’s
giving orders to another, both should agree to take
orders from the situation. Under these conditions
ultimate authority would reside in the will and consent
of the people who perform a particular task. Like
Barnard, Follett treated acceptance as the key to
establishing authority relationships. It is the knowledge
and skills of people in relation to the task being
executed that determines who will exercise authority,
not those people’s positions in the organizational
hierarchy.
Authority relationship
1.
2.
3.
Line authority: it is a command authority. Authority
gives a manager the organizational right to make
decisions and to commit the organization to action.
Staff authority: it is a advisory authority, it is in the
form of counsel, advice, and recommendations.
Functional authority: it is expanding staff authority
is to vest staff members with functional authority.
Functional authority is the right to direct or control
specific activities that are under other mangers span
of control. Functional authority allows a manager
command specific processes.
Delegating authority

Although managers may exercise line, staff, or
functional authority, they must transfer some of their
formal authority to others for their organization to
function effectively.
 Delegation is the process managers use to transfer
formal authority from one position to another within an
organization and thus to put the authority system they
have designed into place.
 Architects delegate authority to drafts people senior
law partners delegate authority to junior lawyers high
school principals delegate authority to vice principals.
 It is important that delegating authority does not
reduce the authority of the architects, principals nor
does it relieve them of their responsibility.
Delegating authority (Cont.)

To delegate means to grant or to confer; it does
not mean to surrender.
 A manager who delegates authority in no way
abdicates the institutional right to act on behalf
of the organization. The manager who delegates
effectively retains authority but does not exercise
it unless the delegatee fails to act appropriately.
 Managers can delegate the right to do anything
they have authority over, unless their source of
authority prohibits doing so.
The delegation process


1.
2.
3.
4.
There are four stages in the delegation
process, although it rarely unfolds in an
orderly fashion from one step to the next.
These stages are:
Assign duties
Transfer task authority
Acceptance condition
Creation of responsibility
The delegation process (cont.)

In the first stage: the delegator identifies a
block of work to be transferred from one area in
the organization to another and assign it to an
employee or group of employees.
 In the second stage: of delegation process, the
delegator transfers authority- the organizational
right to command- to the delegatee. The
subordinate is passive, listening to the delegator
requests and receiving authority.
The delegation process (cont.)
 In
the third stage: the delegatee either
accepts or rejects the task assignment
and the accompanying authority.
 In the fourth and final stage: is the
creation of the delegatee’s obligation to
perform the assigned tasks and to use
the delegated authority properly.
The delegation process (cont.)

Delegation is not confined to a downward process in
which authority is transferred from one level to those
below it in organizational hierarchy, managers can
delegate upward to transfer control to a higher level.
For example to give assurance in certain time frame
supply within a short notice by a customer a
subordinate can delegate to boss, to decide if the
company should make such a commitment.
 Authority delegation is lateral when line managers
transfer authority to staff advisors or to people in other
line department; for example by asking his
organization’s lawyer to decide if the contract would
be legal.
Barriers to effective delegation

The delegation process does not always go so
smoothly. Some of the barriers to effective delegation
reside in the abilities and beliefs of the delegator.
 Managers who are fully capable to delegating may not
want to do so because they lack confidence in others
abilities to do a job well; and they fear being held
personally accountable for the work of others.
 Some manager may be afraid that others will do the
delegated task so well that their success will be a
personal threat.
 Some managers want to strongly to dominate and
influence others that they resist delegating authority.
Barriers to effective delegation (Cont)





Some of the barriers to effective delegation reside with
those who would assume the new responsibilities.
Some employee feel they cannot handle additional
responsibility.
Others are reluctant to accept delegation because
they fear their mangers will criticize them if they fail to
execute the task well.
Some simply do not want any extra work.
If workers perceive no benefits to themselves
managers may have difficulty inducing them to
assume additional responsibility.
Overcoming barriers to delegation

Organization members at the top must create a
climate in which delegation can be effective by
encouraging managers to release some of their
personal hold on authority and to inspire subordinates
to pick it up.
 Managers must be persuaded to give others a chance
to expand their organizational roles.
 Managers must set aside the tendency to insist that
delegated tasks be done their way.
 When assigning tasks and transferring authority,
managers should permit employees to experiment, to
make mistakes and to learn from those mistakes.
Classical principles for effective delegation

1.
2.
3.
4.

Early writers on management tried to create a set of
principles that managers could use to guide the
delegation process:
Parity of authority and responsibility
Responsibility is absolute: to delegate does not
mean to give away authority or to be relieved of
responsibilities.
Scalar principle: lines of authority must be clear as
they run from the very top of the organization to its
lowest levels.
Unity of command: each subordinate should be
accountable to only one superior.
Although these classical principles can serve as
useful guides, they are not universally applicable to
delegation.
Decentralization of authority
 Absolute
centralization exists when authority is
concentrated at a single, central point in the
organization. Decentralization exists when
authority is diffused throughout an organization.
 In practice all organization are somewhere
between the two extremes of absolute
centralization and absolute decentralization.
Decentralization

A highly centralized organization is typically
designed so that all important organizational
decisions are made at a high level in the
organization. Upper level mangers or advisors to
the institutional level make the decisions
considered important and provide directives for
lower level organization members to follow; thus
a decision to adopt a merit pay system would be
made at the top, with lower level managers
ordered to implement the plan.
Decentralization (Cont.)
 With
decentralization, authority is pushed down
to lowest possible hierarchical level. in a highly
decentralized organization authority is spread
throughout the organization both horizontally
and vertically.
 Very low level managers and non managers are
expected to make important decisions that
pertain to their organizational units. In a
decentralized organization the decision to
implement a merit pay system could be made
within a single unit or department.
Decentralization (Cont.)
 Decentralization
refers to the extent to which by
design authority is spread throughout an
organization and thus characterizes by
organization structure; while delegation is the
process through which authority is transferred.
Participation also involves a distribution of
authority; however through delegation and
decentralization, superiors transfer authority to
subordinates; whereas in participation superiors
and subordinates make decisions together.

1)
2)
3)
Decentralization (Cont.)
Every organization needs an appropriate degree of
decentralization to cope with the demands of its
external environment, to coordinate activities within
formal structure, to do particular work and to
manage the attitudes and capabilities of its
members. The appropriate degree of
decentralization enables an organization:
React in a timely fashion to changes in the external
environment
Deal with complexes combination of business
activities
Cope with organizational growth and change
.
4) Place with those most familiar with the
work in positions to manage it.
5) Relieve managers information and
decision overload and
6) Motivate and improve the organizational
human resources.
Determinants of appropriate
decentralization


1.
2.
3.
4.
There is no ideal degree of decentralization
for every, its units and various situations.
There are however several factors that
managers should consider when designing
their organization’s authority.
The external environment
The organization
The work
The people